Japan’s Solar Auction Concludes with $0.029/kWh Average Price

Japan’s renewable energy sector has reached another significant milestone, with the conclusion of its 27th solar power auction. The procurement exercise, managed by the Green Investment Promotion Organization, has locked in an impressively low average price of JPY 4.61/kWh, which translates to approximately $0.029/kWh.

This latest auction allocated a total of 79 MW of utility-scale solar PV capacity, distributed among 11 winning projects. While the total capacity awarded fell short of the 196 MW target for this round, the pricing outcomes signal the increasing economic competitiveness of solar energy in the country.

A Closer Look at the Japan solar auction price

The 27th auction, which was the final round for the 2025 fiscal year, saw a fascinating range of bids. The highest successful bids came in at JPY 6.49/kWh (around $0.041/kWh), well under the established ceiling price of JPY 8.68/kWh.

Most strikingly, the lowest bid was JPY 0.00/kWh for a 400 kW project. This seemingly unusual bid is likely a strategic move by the developer. By bidding at zero, a project can secure crucial grid connection rights through the auction mechanism, while planning to generate revenue through a separate, private Power Purchase Agreement (PPA). This strategy has been observed in previous auctions and points to a maturing market where developers are utilizing diverse financial models.

One of the notable winners in this round was the 14 MW Funaki Solar Farm located in the Yamaguchi prefecture. This project is particularly significant as it sells its power directly to Amazon under a long-term PPA, highlighting the growing role of corporate buyers in Japan’s clean energy transition.

Historical Context and Price Trends in Japan solar auction

Placing these results in context reveals a clear downward trend in solar energy costs in Japan. The results of the 27th auction stand in contrast to previous rounds:

• 26th Auction: Allocated 75.3 MW across 37 projects, with bids ranging from JPY 4.97/kWh to JPY 8.75/kWh.
• 25th Auction: Assigned a larger capacity of 223.3 MW at a higher average price of JPY 6.58/kWh.
• 24th Auction: Allocated 79 MW at an average of JPY 4.06/kWh and also featured a JPY 0.00/kWh low bid.

Looking back at auctions from March 2022 to March 2025, the lowest successful bid prices consistently fell between JPY 5.06/kWh and JPY 8.85/kWh. The consistently sub-JPY 5.00/kWh average prices in the more recent auctions demonstrate remarkable progress in cost reduction.

While the undersubscription of this latest round may suggest challenges in project development pipelines, the aggressive pricing from successful bidders sends a powerful message. Solar power is not only a cornerstone of Japan’s decarbonization strategy but is also an increasingly affordable source of electricity. The combination of competitive auction prices and the rise of corporate PPAs is setting a new course for Japan’s energy future.